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4 Signs a Partial Retirement Is Right for You

Retirement doesn’t have to be an all-or-nothing prospect. Here's why you might choose a middle ground.

Countless workers look forward to retirement and the chance to live by their own schedules. But going from full-time work to absolutely no structure at all can be quite the shock to your finances. And mentally, it can take a toll, too. That's why you may want to consider transitioning into partial retirement for a number of years before making it a full-time thing. Here are just a few indications that a partial retirement might work best for you.

1. You're not confident in your savings level

Since the typical retiree can't live off Social Security alone, the only way to remain financially secure in retirement is to go in with adequate savings. Unfortunately, most Americans aren't close to reaching that status. The average household aged 56 to 61 has a median savings balance of just $17,000, according to the Economic Policy Institute. And even over a shorter retirement, that's not nearly enough to pay the bills, even when combined with the $16,320 a year the average Social Security beneficiary currently receives.

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If your savings aren't in particularly great shape, a partial retirement could be the ideal solution. This way, you'll continue earning some income to either pay the bills or add to your nest egg, but you won't be maintaining the same rigorous full-time work schedule you were formerly committed to. Partial retirement might also allow you to delay your Social Security benefits past full retirement age, thus boosting them by 8% for each year you do so (up until age 70).

2. You're expecting to live a long life

The fact that seniors are living longer is no doubt a good thing, but it also means that retirees' nest eggs are being stretched increasingly thin. If your health is notably good for your age, and you have a family history of living to an older age than most, then it pays to consider a partial retirement initially. This way, you'll avoid tapping your savings to the same degree (if at all) during the first part of retirement, thus enabling your limited funds to last as long as you need them to.

Even if your personal family history isn't particularly geared toward longevity, you should know that according to the Social Security Administration, 1 out of every 4 65-year-olds today will live past the age of 90, while one in 10 will live past 95. In other words, your savings might need to last longer than expected, so if you're otherwise ready to retire, doing so on a partial basis at first will benefit you down the line.

3. You love your job

Many people hate their jobs and aim to leave them as soon as possible. But if you enjoy what you do and it brings you satisfaction, it pays to continue working in some capacity rather than stop abruptly. It's often the case that as we age, our ability to work long hours and endure lengthy commutes declines (either that, or our patience for those things wanes). If you're getting older and your job-related demands are too much to handle, but you otherwise like your work, then reducing your hours could be the perfect solution.

4. You get bored easily

Some people need constant stimulation, while others may be content relaxing and enjoying extended periods of downtime. If you fall into the former camp, then a partial retirement might help you avoid the one ailment that seniors are disproportionately prone to: depression.

It's said that retirement increases the likelihood of suffering from clinical depression by 40%, so going from a structured work schedule to potentially having nothing to do and nowhere to be is a scary prospect. Of course, you can reduce your chances of falling victim to depression by mapping out a plan for how you'll spend your days before you retire, but an even better bet is to ease into retirement slowly, and give yourself time to get used to the notion of not reporting to work for eight hours or more per day.

Though many older workers prefer to dive into full-fledged retirement, there's no reason why you can't consider a middle ground. Partial retirement offers those for whom it's an option the best of both worlds: a chance to get some relief from the daily grind without having to completely give up that paycheck or structure.

Author

Maurie Backman is personal finance writer who's passionate about educating others. Her goal is to make financial topics interesting (because they often aren't) and believes that a healthy dose of sarcasm never hurt anyone. In her somewhat limited spare time, she enjoys playing in nature, watching hockey, and curling up with a good book.